If you and the other parent agree as to how your child is to be supported financially, the agreement can be made into a legally enforceable Child Support Agreement. These agreements can depart from any assessments made through the Department of Human Services (‘Child Support Agency’) and avoid the need for ongoing involvement with the Child Support Agency.
There are two forms of Child Support Agreements you and the other parent could enter into as follows:
Limited Child Support Agreement
A Limited Child Support Agreement requires the following:
(a) There must be an administrative assessment in place through the Child Support Agency; and
(b) The amount of child support to be paid under the agreement must be equal to or greater than the assessment.
A Limited Child Support Agreement can be ended as follows:
(a) By making another limited or binding agreement;
(b) If both parents agree in writing;
(c) If the Child Support Assessment changes by more than 15% then either parent can choose to end the agreement;
(d) It can be ended by either parent after a period of three years passes; or
(e) By a Court Order.
The Limited Child Support Agreement takes effect after being registered by the Child Support Agency.
This means either parent is able to terminate the agreement, without consent of the other parent, after the period of three years. Or if either parent’s assessed income changes by more than 15%, then either parent is able to terminate the agreement, without the consent of the other parent.
As such, Limited Child Support Agreements are naturally a lot easier to change or end, without needing both parents to consent to terminate. This makes them more flexible to changes in the parent’s financial situations, but also makes them riskier as they are easier to terminate in the future prior to the child turning eighteen years of age.
Binding Child Support Agreement
A Binding Child Support Agreement requires the following:
(a) Both parents must get independent legal advice on the advantages and disadvantages of entering into the agreement; and
(b) The lawyers for each parent must sign a certificate of independent legal advice and the certificates must be attached to the agreement.
The Binding Child Support Agreement can only be ended as follows:
(a) By agreement of both parents in writing;
(b) By making another Binding Child Support Agreement; or
(c) By a Court Order.
The Binding Child Support Agreement takes effect on the day it is finalised.
Binding Child Support Agreements are much more difficult to change and require the consent of both parties for termination or any variation. They are however often more expensive, as both parties are required to have their own independent legal advice, so as to make the agreement binding.
Which is better a Limited Child Support Agreement or a Binding Child Support Agreement?
A Binding Child Support Agreement provide a finalisation to Child Support matters more so than a Limited Child Support Agreement which often require review or further negotiation following the passing of three years or a change in a parent’s financial circumstances. The Limited Child Support Agreements however manage changes to parents’ situations better and allow more flexibility for the parties moving forward.
Which is the best option for you and your child will vary depending on your individual circumstances and the specific agreement reached between you and the other parent, as such it is important to always obtain legal advice before entering into any form of Child Support Agreement.
Please contact our team at Richardson Murray to book in for a free initial consultation to discuss your options.
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